Why Apple needs to innovate faster

Why Apple needs to innovate faster

Summary: Steve Jobs is gone and Apple is lost. It's time for the company to push new and great products into the market at a faster pace.

TOPICS: Mobility, Apple, Samsung

ZDNet's most recent Great Debate raised the question whether Apple needs to innovate more rapidly. The answer is a definite “yes” and here’s why.

Apple has been one of the most innovative companies in the world. Based on the vision of Steve Jobs, it has created products that truly changed the world, such as the Macintosh, iPod, iPad, and App Store. Despite these accomplishments, Apple’s pace of innovation has slowed, causing the company to lose its edge as a market leader.

Aside from creating products that delight consumers and starting an entire industry of app developers, Apple’s relentless and rapid drive for innovation has made investors wealthy. When the company released the iPod in 2001, Apple had less than $5.5 billion in revenue and its stock price hovered around $20; the company’s total market capitalization was $7 billion at that time. Today, Apple’s market capitalization is about $500 billion and its stock price is currently around $500.

Apple’s poor record on innovation in recent years is also reflected in market share numbers.  According to IDC, Android has 75% of the smartphone market, compared to Apple’s 17%. In addition, Samsung holds a much larger share of the world smartphone market than does Apple.

For both consumers and the enterprise, mobility and the consumerization of IT have changed the game on how we work, play, and communicate. Apple was once the leader, innovating rapidly and bringing the most interesting products in the world to market. Today, the company lives on past success and future promises, without the innovation we expect. So, yes, the lack of new products has hit Apple hard. For proof, look no farther than Apple’s poor stock performance, which is truly a measure of confidence in the company.

Although Apple’s growth has been incredible, the long-term numbers mask intense weakness over the last few years. Since Steve Jobs sad passing, Apple has released extensions to existing products rather than anything profoundly new. Product line extensions represent a natural evolution for established brands. For example, Apple has released new iPhones, faster laptops, and better screens on the iPad but nothing game changing since the original iPad.

Although lack of innovation may be fine if your company sells detergents or other products that don’t change much over time, it's the kiss of death for a technology company that relies on innovation as the foundation for its existence. Both Google and Samsung now offer phones and tablets in various sizes, experimenting with various form factors, sizes, and operating system features.

As an interesting point of comparison, look at this chart comparing the stock performance of Apple and Samsung. The blue line shows Samsung while the red indicates Apple. Note which stock is doing more poorly:

apple-samsung stock performance

In addition, Microsoft’s acquisition of Nokia signals that company’s intention to be a major player in the smartphone market. As Apple sits still, competitors are extending the concept of mobile devices and releasing numerous products. Samsung even introduced a smart watch ahead of Apple’s anticipated offering.

The ecosystem threat is equally significant. As Apple slides, the Android and Microsoft software environment will grow. Email, music, and other services tempt buyers to each platform and exciting hardware is an important part of that equation.

It is sad and hard to acknowledge that Apple’s glory days of innovation are past. My worthy debate opponent argues that Apple’s products are so good that short-term product delays don’t matter in the larger scheme of Apple greatness. This tempting argument is wrong, however, because the company has run out of “insanely great” ideas. That the real problem and explains why the company once known as the world’s innovation king is now relegated to product line extensions and little more.

We all miss Steve Jobs’ vision because he changed our technology world in many ways. Today, sadly, Jobs is gone and Apple is lost. Sure, the products are still great but they are not fundamentally new. The recent announcement of new iPhones just confirms the verdict: innovation at Apple is history and new products are nowhere to be found.

Topics: Mobility, Apple, Samsung

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  • I know this is the received wisdom

    But I'm not sure it is true.

    Apple's success in large measure is a function of its conservatism. Oh yes, historically (as in 30-40 years ago) they made the big bets on personal computers, and then graphical user interfaces.

    But look at the last ten years: Apple wasn't first to any of the big categories where it made a big splash. Instead, it entered these categories years after the first mover did, doing so with carefully thought out products that thoughtfully considered the reasons the first movers didn't succeed fully.

    A look at Steve Jobs iPhone intro from 1997 is very telling. The first 1/3rd of his presentation was on the flaws of mobile phones of that era... think about it. Mobile phones were already wildly popular, and even smart phones were a good business (the term Crackberry was then common.)

    He pointed out the flaws with "plastic keyboards", the existing realm of phone apps, and the use of a stylus. He wasn't entirely right about the things he found fault with - a couple of them came back into vogue eventually - but it was pretty clear they mostly got their critique right.

    It was clear that the iPhone was a rethink based on what already was - not a new entry into a category that didn't exist.

    The bad Apple - the John Sculley Apple - tried that sort of thing. And they weren't very good at it. (The Newton.)
    • Stupid edit button missing

      2007 not 1997.
    • This has always been Apple's MO: To enter an existing

      market with a product that did it better. They weren't first in PCs, but they did it better. They weren't first with a modern OS, but they did it better (a true UNIX that was easy to use). They weren't first in the MP3 market, but they did it better. Etc, etc, etc.

      Apple doesn't create a market, it transforms a market. Even the iPad didn't create a market, it simply took the tablet market, which had been anemic for years with devices that sucked, and transformed it.
      • Who's on first!

        I'm curious. Who was selling a consumer computer before Apple in 1976? All I can remember were plans and kits. Apple was the first with a product. Who was first with bit-mapped graphics, color graphics, music, multimedia, etc.?

        You say Apple did the MP3 player better. Wasn't that because they developed the tech that made it better? Apple invented Firewire, which gave the iPod a transfer rate orders of magnitude faster than any previous player. Apple invented QuickTime, the first multimedia framework and codecs, ten years before the iPod. Apple invented the iWoz, which let them fit a hard disk drive interface in such a small package. Apple invented "plug and play" which allowed the Mac OS to recognize when an iPod is plugged in. I would be lying if I said that Apple invented "simpler is better", but it seems like their competitors - and critics - still believe that "more is better".

        To say that the iPad did not create a market is to say that the iPad entered a market with zero existing products. Aside from the Apple Newton, all previous tablets were Windows PCs. It is disingenuous to say that tablets that do not run PC software compete in the same market as those that do. Microsoft tried that with Windows RT, and you see where that got them (last I read: They plan to try again with a Surface RT 2! I wonder what "lessons learned" they will bring to the design table this time around. Windows for Pen Computing debuted in 1991; they have only been trying for 2+ decades).

        It is the pundits and haters that like to suggest that Apple merely "transforms" markets. What does that even mean? The closest I can come up with is that Apple "transforms" products and makes them irresistable to "fanboyz". That is Apple's greatest innovation, the ability to create ten million plus NEW fanboyz every month.
        Steve Webb
        • Re: consumer computer before Apple in 1976?

          Those early Apples were not "consumer computers". If you want products priced for the consumer market, you'd have to look to products like the Sinclair machines, starting at a three-figure price tag when everything else (including Apple) was four figures or more.
      • Re: To enter an existing market with a product that did it better

        The logical next progression, then, is to enter the Android market with mobile products superior to anything available from any other OEM.
    • If and when Apple markets a "wearable tech" product (iWatch) Apple's

      Marketing will surely compare it to Samsung's recent watch product and other similar products. Your comment thesis will be repeated once again.
  • Sorry..

    …But a phone is a commodity, nothing more. Apple reinvented themselves and the industry in the process and that was less than 10 years ago. We are still figuring out the new possibilities of these inventions. Apple doesn’t need major innovations right now; they need to sell the right product at the right price. They need to listen to their customer and open to other platforms.

    The main problem here is the “Wow” level needed to sell these phones and tablets. It seems like these toys have become a religious sign, a way of defining ourselves, a way of filling our emptiness. The entire industry needs to slow down because it can’t and won’t keep up with the expectative they have created. The iPhone 5 is more of the same I agree, but it is better than the previous one that was offered to us a year ago. A lot better that is. If this is not enough, I don’t get it. Every other industry is moving forward more slowly. When was the last time we saw a major breakthrough in dishwashers? Don’t get me wrong, I think innovation is key here but a change for a change while leaving behind many unexplored territories is not the right way.
    • I have a three year old Blackberry for a phone

      and I think I accumulate too much gear as it is... you make some good points. There are limits to how much companies can entice us into buying.
    • Well said .... glouchard99!!

      There are people who prefer driving a bare bones BMW and there are people who prefer driving a Hyundai with every conceivable option.
    • So, Apple has entered the appliance era with their devices,

      where, like refrigerators and stoves and washing machines and dishwashers, the only difference between this year's model and the last, is the aesthetics and colors and looks. There are appliance brands and models which do cost more than others, but basically, they're all still the same technology that was "innovated" many decades ago. The tech that Apple is releasing/releasing, is the same tech they basically had back in 2007, which in the IT/computer tech field, is ages ago, comparable to the decades for the appliances market.

      No matter how much one wants to defend or explain away or rationalize what Apple does, they are basically stagnant.
  • Soul

    it is more and more apparent that Steve Jobs was the real soul of Apple. Without him, Apple has become more and more ordinary. I feel that Apple has only two ways to go forward. First, look for someone as crazy and as creative as Jobs to lead them henceforth and hopefully they can still maintain its unique position in the industry; or secondly, to forgo the old image of a superior and niche company who only make high-priced products yet still could sell them like hot cakes, but to make products that the wider audience want like bigger screens, better cameras etc. for the competitors have not such baggage, and they add features on devices faster than Apple itself. Failure to do either one of the above, and if Apple still keeps doing what they are doing now, they will soon become a company with 5% market share just like the Mac days - if this happens it would be a sad day as no other company can create computing and consumer electronic devices as close to having a soul like Apple could.
    • If it would help...

      Eric Schmidt might leave Google (right) but the crown jewel would be Elon Musk, He's one serious visionary, with a practical business mind.
  • These kind of articles seem

    ... like there is a magic wand that makes companies able to innovate just like that.
    Apple makes great hardware for a long time, and has very good design, that's their biggest asset.

    The biggest innovation in recent times it was the iPod (not the iPhone). They took music players, made a well designed software and put all in a very well designed and good hardware.
    From that point it was mostly incremental - they made de iPhone that was an iPod able to make calls, after that, the iPad that was an iPhone with a very big display....maybe they will launch the iClock, an iPod you strap around the wrist :)

    Apple is doing very well, its way of doing business in mobile devices is steadily approaching the way they play in traditional PC market, they've won huge head start and they are winning a lot from that. Some analysts saw the growth of their mobile devices and just went insane, that explains their stock value performance - $700 was very exaggerated. Obviously market share could never be maintained with premium prices and with not much diversification. Also market of tablets and smartphones couldn't keep the growth rate of past times, it will slowdown eventually.
  • Apple hype

    "Apple has been one of the most innovative companies in the world"

    Grossly untrue. What stands out is their design and marketing of, and theft or acquisition of, pre-existing ideas.
    Tim Acheson
    • right. Apple is not innovative

      The word has been watered down lately. That's not to take away from what they've accomplished with the iProduct line, but its true about the design and marketing. And of course everybody borrows ideas, but its apple that patents every possible thing they can think of no matter how trivial.
    • Tim Acheson Again...

      Tim, can you tell us how any other company has innovated as much as Apple? Be sure to give examples. What was innovative about any of the Windows or DOS offerings? We'd really like to know what you are thinking, rather than your simple generalized delusions.

      Lemme guess... you think Dell is innovative, right? LOL
    • Innovate does not mean Invent.

      Innovate does not mean "invent". At best it means "re-invent" or "refine". To be innovative is to do something in an (arguably) better way.

      And this *is* what Apple has done for the 37 years it's been around.

      FWIW, on the subject of Theft: Ideas are not protectable by copyright or patent, only the specific implementation of that idea. That's why Apple is accused of suing over "stealing" when they themselves "steal".

      Apple takes ideas from others, Others take implementations from Apple. That's why when Apple sues others, Apple wins most of the time and when others sue Apple, they lose to Apple most of the time.

      To the layperson it appears that "everybody steals from everybody else", but only by painting with a rather wide brush can you call the two actions "the same".

      This is not to say they are innocent. Far from it.

      Things Apple DID steal (actual implementations, not just ideas): Alt-Tab, the "Help" Menu (it was a button on Apple products for the first 10+ years), and PostScript image processing. Hell, even "swipe down for notifications" was a direct implementation theft - yet they never get called out on it. Instead they get called out on using ideas and doing it in unique ways.

      Apple gets dragged in the press mud for things they are innocent of, yet get away scot-free for things they are guilty of.

      This, however, does not negate the supported-by-facts assertion that Apple has been one of the most innovative companies in the world.
      Neurotic Nomad
      • Re: only the specific implementation of that idea

        You don't have to implement an idea, or even prove it will work, before you can get a patent on it.
        • That's not quite correct.

          You have to describe the implementation of the idea.

          US Code Title 35 §112.
          The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention."

          You have to show how it can be implemented by "any person skilled in the art to which it pertains."

          Basically, you patent the implementation of the idea, not the idea itself.